Exam 7: Tax Credits

Edward takes a job in Canada working for an automobile manufacturer.He spends all of 2018 in Canada, earns $130,000 in wages, and is a bona fide resident of that country.How much foreign income exclusion can Edward claim?

Daddy Warbucks is in the process of adopting Annie from a New York orphanage.He pays $7,000 in 2017, and $7,500 in 2018.Daddy Warbucks' AGI for 2018 is $165,000.​ a.How much is the adoption credit that Daddy Warbucks may claim for 2018 if the adoption becomes final in 2018? b.How much is the adoption credit that Daddy Warbucks may claim for 2018 if the adoption becomes final in 2019? c.How much is the adoption credit that Daddy Warbucks may claim for 2018 if the adoption falls through and is never finalized?

Married taxpayers must generally file a joint tax return to claim the child and dependent care credit.

Marion has an 11-year-old daughter.Please calculate her child and dependent care credit prior to any tax liability limitation under these two alternatives: a.Marion pays $4,000 a year in day care costs.Her salary is $32,000. b.Marion pays $8,000 a year in day care costs.Her salary is $80,000.

The total expenses that can be taken as a credit for all tax years for adoption of a child without "special needs" are $10,000.

For 2018, Beatrice qualifies for the earned income credit.She has one daughter who is 7 years old.Her earned income and adjusted gross income for 2018 are $6,200. a.Using the EIC tables, calculate the amount of her 2018 earned income credit. b.​Calculate the amount of Beatrice's 2018 earned income credit assuming her earned income for 2018 is $8,500 and her adjusted gross income is $10,000.

Caprice is a single 42-year-old with income of $14,000 in 2018.She lacked minimum essential coverage for 7 months in 2018.What is her individual shared responsibility payment amount?

Household income for purpose of the premium tax credit includes all of the following except:

Richard has $30,000 of income from a country that imposes a 40-percent income tax and $30,000 of income from a country that imposes a 34 percent income tax.In addition to the foreign income, he has taxable income from US sources of $120,000 and a US tax liability, before credits, of $45,575.The amount of Richard's foreign tax credit is:

For 2018, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

Explain what type of educational expenses qualify for the American Opportunity tax credit and what type of educational expenses qualify for the lifetime learning credit.

Arthur is divorced with two dependent children, ages 8 and 13.His adjusted gross income is $28,000, and he incurs qualified child care expenses of $6,000, $3,000 for each child. a.What is the amount of Arthur's qualified child care expenses after any limitation? b.Calculate the amount of Arthur's child and dependent care credit before any tax liability limitation.

John graduates from high school in 2018 and enrolls in a private college in the fall.His parents pay $10,000 for his tuition and fees. a.Assuming John's parents have AGI of $86,000, what is the American Opportunity credit they can claim for John? Explain. b.Assuming John's parents have AGI of $175,000, what is the American Opportunity credit they can claim for John? Explain.

To be eligible for the earned income credit for 2018, a taxpayer must have a "qualifying child."

The child and dependent care provisions:

Jeff and Geri are married and have AGI of $95,000 and three young children.Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands.Geri earns $5,000 teaching the yoga class.How much child and dependent care credit can Jeff and Geri claim? Why?

a.Norm and Linda are married, file a joint return, and have one 5-year-old child.Their adjusted gross income is $436,000.What is their child credit for the current year? b.If Norm and Linda had a 3-year-old as well as the 5-year-old and an 18-year-old from Linda's first marriage, what would their total child tax credit and other dependent credit be for the current year? b.above, how many children qualify for the child tax credit? Explain. c.In

Bob and Carol file their tax returns using the married filing jointly status.Their AGI is $132,500.They have two children, ages 11 and 7.How much child tax credit can Bob and Carol claim for their two children?

Sheila and Jerry are married taxpayers with $600 of foreign tax withholding from the dividends in a mutual fund.They have enough foreign income from the mutual fund to claim the full $600 as a foreign tax credit.They are in the 35% tax bracket and they itemize deductions.Should they claim the foreign tax credit on the Form 1040 or a deduction for foreign taxes on their Schedule A? Why?

Robert and Mary file a joint tax return for 2018 with adjusted gross income of $34,000.Robert and Mary earned income of $20,000 and $14,000, respectively, during 2018.In order for Mary to be gainfully employed, they pay the following child care expenses for their 4-year-old son, John: Union Day Care Center \1 ,700 Wilma, baby sitter (Robert's mother) \1 ,000 What is the amount of the child and dependent care credit they should report on their tax return for 2018?